Bankers are promoting a bill they believe will level the playing field on military bases.
For more than a decade, banks have been paying market rates for space on military facilities while the Defense Department has allowed credit unions to operate rent-free. Steven Lepper, a retired Air Force major general who leads the Association of Military Banks of America, says the situation has become an “existential issue” for his members.
About 130 military installations had bank branches in 2004, Lepper said. The count has dropped to 75 — including bases with only a bank ATM — reflecting a recent decision by the $24 billion-asset UMB Financial in Kansas City, Mo., to shutter its branch on Whiteman Air Force Base in Sedalia, Mo.
“There are some bases, quite a few actually, that only have bank ATMs on them, which I view as insufficient to provide the kinds of services banks ought to be providing to our military communities,” Lepper said.
The AMBA, American Bankers Association and Independent Community Bankers of America are backing language in the Senate version of the National Defense Authorization Act that would eliminate the disparity in rents.
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“The different approach has actually garnered us more support in Congress,” Lepper said. Lawmakers "see it as a way to establish equity among banks and credit unions, as opposed to simply requiring [the Defense Department] to not charge banks rent.”
The bill is currently in a conference committee, with lawmakers working to reconcile the Senate and House versions. The House version has no mention of equalizing on-base rents.
Credit union groups, including the Defense Credit Union Council, a trade group representing military credit unions, oppose any change to the status quo.
In a letter last month to the leaders of the Senate and House Armed Services Committees, Brad Thaler, vice president of legislative affairs at the National Association of Federally-Insured Credit Unions, wrote that the Senate bill would put large banks like Bank of America and Wells Fargo — both of which belong to the AMBA — on the same footing as a local on-base credit union.
“Rather than granting nominal leases to banks and credit unions, the [Defense Department] could very well decide to stop granting nominal leases altogether,” Thaler wrote. “We do not want to subject the ability of defense credit unions to serve their members to the political winds surrounding big bank consumer abuses.”
The Credit Union National Association also opposes the move. Jim Nussle, the group's president and CEO, called it a harmful measure “that puts the financial health of our military members in jeopardy."
Nussle also highlighted the possibility that big banks would get a leg up.
“We have seen how these banks have treated their customers over the years," he said. "There is no good reason to make it easier for them to engage our servicemen and women.”
Lepper points out that regulators have also sanctioned credit unions for consumer abuses, even some involving the military.
“It’s really about the only leg the credit unions can stand on right now, because otherwise it’s hard for them to fight against the idea banks and credit unions should be treated equally on military bases,” Lepper said.
UMB's decision to close the Whiteman lease "was based on business operational efficiencies throughout the footprint,” a company spokeswoman said, adding that customers are now being served by a branch in Warrensburg, Mo., about 19 miles from the base. The bank "remains strong and committed to its customers throughout Missouri."
Lepper said he lobbied another bank to take over UMB's space at Whiteman, but was unsuccessful.
“Their response to me was, ‘Look, we’ve done the math and looked at a presence on the [base]. While we’d love to be there, we just don’t think we can compete. The playing field is just too uneven,' " Lepper said.
